RIO CRISTAL RESOURCES CORPORATION

Managements Discussion and Analysis

For the Three and Six Months Ended September 30, 2014
EXPRESSED IN US DOLLARS

RIO CRISTAL RESOURCES CORPORATION

MANAGEMENTS DISCUSSION AND ANALYSIS
For the three months ended September 30, 2014
Introduction
This managements discussion and analysis (MD&A) of Rio Cristal Resources Corporation
(Rio Cristal or the Company) for the three and six months ended September 30, 2014, takes
into account information available up to and including November 30, 2014. This MD&A should
be read in conjunction with the condensed consolidated interim financial statements (unaudited)
for the three months ended June 30, 2014 and the audited consolidated financial statements for
the year ended March 31, 2014, which are available on the Companys website and on the
SEDAR website at www.sedar.com. The Company has prepared the condensed consolidated
interim financial statements in accordance with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB) applicable to the
preparation of interim financial statements including IAS 34, Interim Financial Reporting. The
information provided herein supplements, but does not form part of, the condensed consolidated
interim financial statements for the three and six months ended September 30, 2014.
All dollar amounts are expressed in United States dollars unless otherwise noted.
Forward-Looking Information
The information contained herein contains forward-looking statements within the meaning of
applicable Canadian securities legislation. Forward-looking statements relate to information that
is based on assumptions of management, forecasts of future results, and estimates of amounts
not yet determinable. Any statements that express predictions, expectations, beliefs, plans,
projections, objectives, assumptions or future events or performance (often, but not always,
using words or phrases such as expects or does not expect, is expected, anticipates or
does not anticipate, plans, estimates or intends, or stating that certain actions, events or
results may, could, would, might or will be taken, occur or be achieved) are not
statements of historical fact and may be forward-looking statements. Statements concerning
reserves and mineral resource estimates may also be deemed to constitute forward-looking
statements to the extent that they involve estimates of the mineralization that will be
encountered as a property is developed, and in the case of mineral reserves, such statements
reflect the conclusion based on certain assumptions that the mineral deposit can be
economically exploited.
Forward-looking statements include, but are not limited to, statements with respect to the future
price of zinc, copper, gold, silver and other metals, the estimation of mineral resources and
reserves, the realization of mineral resource and reserve estimates, the timing and amount of
estimated future production, costs of production, capital expenditures, costs and timing of the
development of new deposits, timing of completion of studies and reports, success of
exploration and development activities, permitting time lines, currency fluctuations, requirements
for additional capital, government regulation of exploration operations, environmental risks,
unanticipated reclamation expenses, title disputes or claims, completion of acquisitions and their
potential impact on the Company and its operations, limitations on insurance coverage and the
timing and possible outcome of pending litigation. Forward-looking statements involve known
and unknown risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from any future results,
performance or achievements expressed or implied by the forward-looking statements. Such
factors include, among others, risks related to the completion and integration of acquisitions and
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actual effects of the acquisitions; risks related to joint venture operations; actual results of
current exploration activities; actual results of current reclamation activities; conclusions of
future economic evaluations; changes in project parameters as plans continue to be refined;
future prices of precious and base metals; possible variations in ore resources, grade or
recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents,
labour disputes and other risks of the mining industry; delays in obtaining governmental
approvals or financing or in the completion of development or construction activities, as well as
those factors discussed elsewhere in this MD&A. Forward-looking statements are based on
certain assumptions that management believes are reasonable at the time they are made. In
making the forward-looking statements in this MD&A, the Company has applied several material
assumptions, including, but not limited to, the assumption that: (1) market fundamentals will
result in sustained zinc, copper, gold and silver demand and prices; and (2) any additional
financing needed will be available on reasonable terms. Although the Company has attempted
to identify important factors that could cause actual actions, events or results to differ materially
from those described in forward-looking statements, there may be other factors that cause
actions, events or results not to be as anticipated, estimated or intended. Should one or more of
these risks and uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described in forward-looking statements. Investors
are cautioned against attributing undue certainty to forward-looking statements. The Company
does not undertake to update any forward-looking statements that are incorporated by reference
herein, except in accordance with applicable securities laws.
Overview
Rio Cristal was incorporated on November 24, 2006 under the name Rio Cristal Zinc
Corporation and is organized under the laws of British Columbia, Canada. In June 2009, the
Company changed its name to Rio Cristal Resources Corporation. The Companys head office
is located at Suite 555, 999 Canada Place, Vancouver, BC V6C 3E1 and the registered and
records office is located at 200 Burrard Street, P.O. Box 48600, Vancouver, British Columbia,
V7X 1T2. The condensed consolidated interim financial statements (unaudited) as at
September 30, 2014 consist of Rio Cristal and its two wholly owned subsidiaries: Cerro La Mina
Cayman Ltd. and Rio Cristal Zinc Cayman Ltd. which are both organized under the laws of the
Cayman Islands. On April 7, 2014 Cerro La Mina S.A., Rio Cristals wholly owned subsidiary,
was dissolved.
The Company is in the business of acquiring and exploring mineral properties. Rio Cristal does
not currently have any mineral producing properties or any revenues from any mineral
properties. The Company is publicly traded with shares listed on the TSX Venture Exchange
(TSX-V) and the Bolsa de Valores de Lima (BVL) in Peru.
The Company focused much of its resources in the past on the Bongar zinc project but
divested itself of the Bongar project at the end of the prior year. Any future acquisitions are
dependent upon obtaining prospects on reasonable acquisition terms and also subject to
financing of the Company.
Going Concern
The business of mining and exploration involves a high degree of risk and there can be no
assurance that exploration programs will result in profitable mining operations.
The Company had a net working capital deficit of $1,504,687 million as at September 30, 2014
compared to a net working capital deficit of $1,397,092 million as at March 31, 2014. The cash
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balance at September 30, 2014 was $3,249 compared to $6,613 as at March 31, 2014. As at
September 30, 2014 current liabilities were $1,510,035 million compared to $1,404,432 million
as at March 31, 2014.
The Companys condensed consolidated interim financial statements (unaudited) have been
prepared on the basis that the Company will continue as a going concern, which assumes that
the Company will be able to meet its commitments, continue operations, realize its assets and
discharge its liabilities in the normal course of business for the foreseeable future. The
condensed consolidated interim financial statements do not reflect the adjustments to the
carrying values of assets and liabilities and the reported expenses and balance sheet
classifications that would be necessary were the going concern assumption inappropriate, and
these adjustments could be material. Several adverse conditions cast significant doubt on the
validity of this assumption. The Company has incurred losses since inception and has an
accumulated deficit of $24,130,871 at September 30, 2014. The Company has limited
resources, has no source of operating cash flow, has a working capital deficit at September 30,
2014 of $1,504,687 and has no assurances that sufficient funding will be available to meet its
administrative overhead and conduct further exploration and development on new properties,
should any new properties be acquired.
The Companys ability to continue as a going concern is dependent upon its ability to obtain the
necessary financing to meet its requirements. However, there can be no assurance the
Company will be successful in these initiatives. The Company will require additional financing in
the near future for general working capital purposes. Furthermore, as the Company does not
have a source of revenue, it will require ongoing financing in the future for working capital,
general and administrative purposes and in order to conduct any future exploration programs.
Ongoing general and administrative and regulatory expenses will necessitate additional
financing in the future. Factors that could affect the availability of financing include fluctuations
in the Companys share price, the state of international debt and equity markets, investor
perceptions and expectations, and global financial and metals markets. The Company believes
it will be able to obtain the necessary financing to meet its requirements on an ongoing basis;
however, there can be no assurance that the necessary financing will be obtained, and such
financing, if available, may be very dilutive to the Companys shares and shareholders. As it has
in the past, the Company plans to obtain additional financing through, but not limited to, the
issuance of additional equity. There can be no assurance that a financing will be completed on
a timely basis. In the interim, the Company has relied on loans from its former Directors and
Officers in order to provide working capital for ongoing expenses.
Current Developments
Effective November 30, 2014, Matthew Watson was appointed Chief Executive Officer and
Chief Financial Officer of the Company.
Effective September 29, 2014, the Company consolidated its share capital on a ten for one
basis. The consolidation was done in order to provide the Company with greater flexibility for
junior exploration and financing.
Effective September 22, 2014, Matthew Watson was appointed President and Palu Philips was
appointed Corporate Secretary of the Company.
Effective August 28, 2014, Matthew Watson (appointed Chairman), Daniel Kriznic and Palu
Philips were elected to the Board of Directors. At the same date, Tony Hines, Thomas Findley,

Miguel Cardozo, Andre Gauthier and Hans Flury resigned from the Board of Directors of the
Company. Thomas Findley also resigned as the Companys President and CEO.
Effective April 7, 2014 Cerro La Mina S.A., Rio Cristals wholly owned subsidiary, was dissolved.
Results of Operations
For the Three and Six Months Ended September 30, 2014
The Companys net loss for the three and six month period ended September 30, 2014 was
$40,544 (loss of $0.02 per share) and $106,393 (loss of $0.06 per share) compared to a net
loss of $44,055 (loss of $0.03 per share) and $324,485 (loss per share of $0.20) for the same
periods ended September 30, 2013. The decline in loss resulted from the continuation of the
cost reduction plan which decreased general office expenses, exploration expenses and
salaries and consulting costs in the periods ended September 30, 2014 as compared to the
same periods in 2013 where the Company commenced the cost reduction program and
divested itself of the Bongara property, closed the office in Lima, Peru and decreased staff.
Summary of Quarterly Results
The following table sets out selected unaudited quarterly financial information of Rio Cristal and
is derived from the condensed consolidated interim financial statements (unaudited) prepared
by management.
Net loss
For the period ending March 31,
2015
2014
2013
Q1

(65,849)

(280,430)

(747,064)

Loss per share

For the period ending March 31,
2015
2014
2013
$

(0.04)

(0.16)

(0.50)

Q2

(40,544)

(44,055)

(503,444)

(0.02)

(0.03)

(0.34)

Q3

n/a

(97,459)

(436,573)

n/a

(0.06)

(0.29)

n/a

(73,590)

(1,945,981)

n/a

(0.04)

(1.21)

Q4
Total

(106,393)

(495,534)

(3,633,062)

(0.06)

(0.29)

(2.31)

Quarterly results will vary in accordance with the Companys exploration, corporate activity and
financing activities.
The costs have declined in the four most recent quarters as a result of a reduction of overhead
costs and reduced activity of the Company.
Liquidity and Capital Resources
The Company had a net working capital deficit of $1,504,687 as at September 30, 2014
compared to a net working capital deficit of $1,397,092 million as at March 31, 2014. The cash
balance at September 30, 2014 was $3,249 compared to $6,613 as at March 31, 2014. As at
September 30, 2014 current liabilities were $1,510,035 million compared to $1,404,432 million as
at March 31, 2014.

Investing Activity
During the three and six months ended September 30, 2014 the Company had no investing
activities.
Financing Activity
During the three and six months ended September 30, 2014, the Company received a loan of
$9,000 from a former director compared to $162,000 received from related parties in the three
months ended September 30, 2013.
Outstanding Share Data
The Company is authorized to issue an unlimited number of common shares, all without
nominal or par value. The Company completed a 10:1 share consolidation on September 29,
2014. In addition, the Company completed a 10:1 share consolidation on July 31, 2013 which
was approved by the shareholders at the AGM on September 12, 2012. The information
contained in this MD&A takes into account the effect of both share consolidations.
The table below summarizes the Companys common shares and securities convertible into
common shares as at November 30, 2014:
Price

Expiry date

Common shares, issued and outstanding

Securities convertible into common shares:
Warrants

CDN$

Number of common
shares
1,725,909

$10.00
$10.00

January 20, 2015

January 20, 2015

44,291
17,800
1,788,000

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.
Related Party Transactions
Balances and transactions between the Company and its subsidiaries have been eliminated on
consolidation. Details of the transactions between the Company and other related parties are
disclosed below.
a.

Trading transactions

In August 2014, amounts due to former related parties totaling $611,141 were purchased by an
independent third-party (the Debt Purchase). Prior to the Debt Purchase, at June 30, 2014 due
to related parties consisted of $611,141 (March 31, 2014 - $604,439) owing to individuals or
companies whose officers, directors or partners were also officers or directors of the Company.
Of the amount at June 30, 2014, $109,051 were loans from Directors and Officers of the
Company. These loans are unsecured, have a term of one year, and incurred annual interest of
6%. The remaining loans consisted of deferred salaries and services payable of $491,926 as at
June 30, 2014 (March 31, 2014 - $ 487,376) which were unsecured, non-interest bearing and
due on demand.

Historically, certain of the Companys officers and directors render services to the Company as
sole proprietors or through companies in which they are an officer, director or partner.
Nature of transactions
Legal fees
Accounting fees

DuMoulin Black (ended December 30, 2013)

Avisar Chartered Accountants (ended September 18, 2013)

The Company incurred the following fees and expenses in the normal course of operations in
connection with related parties.

Legal fees
Accounting fees

b.

Three months
Six months
ended
ended
September 30, 2014
$$$$-

Three months
Six months
ended
ended
September 30, 2013
$ 28,528
$ 51,398
14,444
15,079
$ 42,972
$ 66,477

Compensation of key management personnel

In the year ended March 31, 2014 and the period from April 1, 2014 to September 30, 2014, no
salaries to key management personnel were paid. All of these salaries were accrued and
included as amounts due to related parties at June 30, 2014 and subsequently formed part of
the Debt Purchase. As at September 30, 2014 all former key management personnel have
resigned and the current officers and directors do not have salaries or other compensation
being accrued.
The remuneration of the former directors, chief executive officer, and president and chief
financial officer (collectively the key management personnel) during the three and six months
ended September 30, 2014 and 2013 were as follows:

Salaries
Share-based
compensation
Total

Three months
Six months
ended
ended
September 30, 2014
$$7,500
126
$-

$7,626

Three months
Six months
ended
ended
September 30, 2013
$ 21,833
$ 50,500
(8,820)
9,626
$13,013

$60,126

Critical Accounting Policies

The details of Rio Cristals accounting policies are presented in Note 4 of the audited
consolidated financial statements for the year ended March 31, 2014.
Critical Accounting Estimates
The preparation of the condensed consolidated interim financial statements (unaudited) requires
management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosures of contingent assets and liabilities at the date of the condensed
consolidated interim financial statements (unaudited) and the reported amounts of revenues and
expenses during the reporting period. The significant estimates and judgments are unchanged
from those disclosed in the Companys annual financial statements for the year ended March
31, 2014.

Financial instruments and financial risk

The Companys financial instruments are exposed to certain financial risks which are discussed
in detail within Note 7 to the Companys March 31, 2014 audited financial statements and Note
6 to the Companys September 30, 2014 condensed consolidated interim financial statements
(unaudited). These were also discussed in the Companys March 31, 2014 annual management
discussion and analysis.
Additional Disclosure for Venture Issuers without Significant Revenue
Additional disclosure concerning Rio Cristals general and administrative expenses and
resource property costs is provided in the Companys condensed consolidated interim
statement of loss and comprehensive loss contained in its condensed consolidated interim
financial statements (unaudited) for September 30, 2014 and 2013 that is available on Rio
Cristals website at www.riocristalresources.com or on its SEDAR Page Site accessed through
www.sedar.com.
Controls and Procedures

In connection with Exemption Orders issued in November 2007 and revised in December 2008
by each of the securities commissions across Canada, the Chief Executive Officer and Chief
Financial Officer of the Company will file a Venture Issuer Basic Certificate with respect to the
financial information contained in the consolidated financial statements and respective
accompanying Managements Discussion and Analysis.
In contrast to the certificate under National Instrument (NI) 52-109 (Certification of disclosure
in an Issuers Annual and Interim Filings), the Venture Issuer Basic Certification does not
include representations relating to the establishment and maintenance of disclosure controls
and procedures and internal control over financial reporting, as defined in NI 52-109.

Disclosure Controls and Procedures

Disclosure controls and procedures (DC&P) are intended to provide reasonable assurance
that information required to be disclosed is recorded, processed, summarized and reported
within the time periods specified by securities regulations and that information required to be
disclosed is accumulated and communicated to management. Internal controls over financial
reporting (ICFR) are intended to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purpose.
TSX-V listed companies are not required to provide representations in the annual filings relating
to the establishment and maintenance of DC&P and ICFR, as defined in Multinational
Instrument 52-109. In particular, the CEO and CFO certifying officers do not make any
representations relating to the establishment and maintenance of (a) controls and other
procedures designed to provide reasonable assurance that information required to be disclosed
by the issuer in its annual filings, interim filings or other reports filed or submitted under
securities legislation is recorded, processed, summarized and reported within the time periods
specified in securities legislation, and (b) a process to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with the issuers GAAP.
The issuers certifying officers are responsible for ensuring that processes are in place to
provide them with sufficient knowledge to support the representations they are making in their
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certificates regarding the absence of misrepresentations and fair disclosure of financial

information. Investors should be aware that inherent limitations on the ability of certifying officers
of a TSX-V issuer to design and implement on a cost effective basis DC&P and ICFR as defined
in Multinational Instrument 52-109 may result in additional risks to the quality, reliability,
transparency and timeliness of interim and annual filings and other reports provided under
securities legislation.
Approval
The Board of Rio Cristal has approved the disclosure contained in this MD&A.
Additional Information
Additional information relating to Rio Cristal is on SEDAR at www.sedar.com.

RIO CRISTAL RESOURCES CORPORATION

Head Office

#555 999 Canada Place

Vancouver, BC, Canada V6C 3E1

Telephone:

(604) 687-1717
Facsimile:
(604) 687-1715

Directors

Matthew Watson
Daniel Kriznic
Palu Philips

Officers

Matthew Watson President

Palu Philips - Corporate Secretary

Registrar and
Transfer Agent

Computershare Investors Services Inc.

#401 - 510 Burrard Street
Vancouver, BC, Canada V6C 3B9

Auditor

Davidson & Company LLP

609 Granville St
Vancouver, BC V7Y 1G6

Solicitors

Borden, Ladner, Gervais LLP

1200 Waterfront Centre
200 Burrard Street
P.O. Box 48600
Vancouver, British Columbia V7X 1T2

Shares Listed

TSX Venture Exchange

Trading symbol ~ RCZ
Bolsa de Valores de Lima
Trading Symbol ~ RCZ

Investor Relations

mwatson[@]shaw.com

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